Hard drive giants Seagate and Toshiba are reportedly fighting to acquire TDK’s magnetic-head business, threatening to shake up an already heavily concentrated storage market.
The Japanese electronics outfit is the world’s last major independent supplier of the magnetic recording heads used to read and write data on conventional hard disks. Whoever controls the business could gain considerable influence over the remaining HDD manufacturers.
According to Bloomberg, Toshiba approached TDK about acquiring the operation during the spring, but Seagate entered the contest over the summer with a higher offer. People familiar with the negotiations believe the deal could be worth several billion dollars.
The situation is particularly awkward for Toshiba, which depends entirely on TDK for its magnetic recording heads. Seagate and Western Digital manufacture most of their heads and turn to TDK when they need additional capacity.
Should Seagate win the bidding, Toshiba could find itself dependent on one of its biggest competitors for an essential component. Given the industry’s enthusiasm for keeping rivals at a comfortable distance, that would hardly be ideal.
The takeover battle comes as the hard drive industry enjoys an unexpected revival, courtesy of enormous demand from data centres. Although solid-state drives have displaced mechanical disks in many consumer machines, conventional HDDs remain attractive for storing enormous volumes of information at comparatively low cost per terabyte.
Demand for higher-capacity drives is pushing manufacturers towards heat-assisted magnetic recording (HAMR), which uses a laser to heat a tiny section of the recording medium during writing. Seagate has already commercialised HAMR technology, while Toshiba is developing its own implementation.
Toshiba has been preparing to expand its market position and reportedly intends to double HDD production capacity for data centres by fiscal 2027, including investment in manufacturing operations in the Philippines. Without a dependable supply of recording heads, that ambition could prove expensive.
TDK has spent recent years concentrating on batteries, sensors and electronic components. Selling its magnetic-head operation could free up capital for investment elsewhere, particularly as the business requires substantial capital expenditure and serves a market dominated by three manufacturers.
Any acquisition by Seagate could attract scrutiny from competition regulators because it would place an important independent component supplier under the ownership of a major HDD manufacturer. European competition authorities previously identified TDK as the only merchant-market supplier of hard drive recording heads during an earlier examination of industry consolidation.
TDK has cautioned that reports of a possible sale were not based on an official company announcement and said it had made no decision. Toshiba has disputed elements of the reported negotiations, including claims concerning future supply arrangements.
Neither company has announced an acquisition agreement, leaving Toshiba facing the uncomfortable possibility that its expansion plans could depend on a component business controlled by one of its biggest competitors.
